California Auto Insurance Rates: Why They Spiked, How They Mirror the Home Insurance Crisis, and Where They’re Leveling Off

For the last several years, California’s home insurance crisis has dominated the headlines: non-renewals, the FAIR Plan, and premiums that doubled overnight. But many California households have been hit by a second wave at the same time. Car insurance rates climbed fast too, and for families paying for both, it created a perfect storm.

Here’s a look at why California auto insurance rates went up, how the auto and home insurance crises mirror each other, where things are finally leveling off, and what you can do about it.

The short version

• Auto rates were frozen, then surged. California approved essentially no auto rate increases for more than two years during the pandemic, then the largest insurers’ approved increases averaged about 13% in 2023 and 15.4% in 2024.
• The causes look a lot like home insurance: higher costs to fix what’s damaged, bigger losses, regulation that lagged behind costs, and carriers pulling back.
• Auto is leveling off. Approved increases slowed to about 6% in 2025, State Farm filed a 6.2% rate cut for 2026, and national car insurance prices turned negative in mid-2026.
• Home is still catching up. Wildfire risk is a longer, harder problem to price, so home insurance is moving more slowly.

Part 1: How California auto insurance became a crisis

2020–2022: Refunds, a freeze and a backlog

When the pandemic emptied the roads in 2020, Insurance Commissioner Ricardo Lara ordered auto insurers to return premium to drivers, with early estimates around $2.4 billion. Then something unusual happened: California approved no personal auto rate increases for more than two years. The first approval came in November 2022.

Meanwhile, costs didn’t wait. Drivers returned to the road faster and more aggressively, crashes became more severe, and repair and medical costs climbed. Direct combined ratios for the largest California auto insurers reached about 104 or higher in 2022, meaning they paid out more in claims and expenses than they collected in premium.

2023–2024: Catch-up increases and a market that tightened

Insurers responded the same way they did in home insurance. Some paused or restricted new auto sales, and dozens filed for large increases. In early 2024 alone, regulators approved increases of up to 31.1% for some companies, including about 30% for an Allstate company and 21% for State Farm, with 75 more requests still pending. State Farm followed with another 17.7% approved increase effective in early 2025.

Compounded, those approved increases add up to roughly 38% from 2023 through 2025 for the carriers that write most California auto policies. And on January 1, 2025, California raised its minimum liability limits for the first time in more than 50 years, from 15/30/5 to 30/60/15, which raised costs for many drivers who carried the minimum. Those limits rise again to 50/100/25 in 2035.

Part 2: Why car insurance got so expensive

• Repairs cost far more. Bumpers, mirrors and windshields now hold cameras and sensors that must be replaced and recalibrated. The average collision repair rose to about $4,774 in 2025, up from $3,225 in 2019.
• Cars cost more to replace. Higher new and used vehicle prices raised total-loss payouts, and tariffs and supply chains added pressure on parts.
• Heavier vehicles and more severe crashes. SUVs and electric vehicles are heavier, and post-pandemic driving brought higher speeds and more serious collisions.
• Injury claims got bigger. The Insurance Research Council found average bodily injury payments rose from about $14,000 to over $20,000 between 2017 and 2022, while attorney involvement climbed from 40% to nearly 50% of claimants.
• Uninsured drivers. About 1 in 5 California drivers (20.4% in 2023) was uninsured, per the Insurance Research Council, which pushes cost onto insured drivers through uninsured motorist claims.
• Wildfire reaches auto too. The January 2025 LA fires produced more than 7,000 auto claims and nearly $200 million paid, according to the Department of Insurance.

Part 3: The parallels between home and auto

Put the two lines side by side and the pattern is hard to miss:

Force	Home insurance	Auto insurance
Cost to fix what’s damaged	Construction labor and materials up sharply since 2020	Parts, sensors and labor: average collision repair about $4,774 in 2025 vs. $3,225 in 2019
Bigger, costlier losses	Wildfires, including the January 2025 LA fires	More severe crashes, heavier vehicles, higher injury and legal costs
Rate approval lag	Years of rates that trailed wildfire risk	No auto increases approved for over two years (2020–2022) while costs climbed
Carrier pullback	Pauses on new home policies; FAIR Plan growth	Pauses and restrictions on new auto sales in 2022–2023
Catch-up increases	Large approved increases; FAIR Plan +29.1%	About 13% (2023) and 15.4% (2024) average approvals
Where it stands now	Still rising, but more carriers returning	Leveling off: smaller increases and some rate cuts

The common thread is California’s Proposition 103 prior-approval system. It has long kept California’s auto rates below the national average, which is a real benefit. But when costs rise quickly, rates can lag behind, insurers pull back, and the eventual catch-up arrives all at once. That happened in auto from 2020 to 2024, and it’s still playing out in home insurance. Read Why California Home Insurance Rates Are Rising and The California Home Insurance Crisis, Explained.

Part 4: Why it’s a perfect storm for California households

Home and auto rarely spike at the same time. This time they did, and they compound each other in a way most people don’t see coming:

• Two essentials at once. Most homeowners can’t drop either policy. A lender requires home insurance, and the state requires auto insurance.
• The lost bundle. When a home is non-renewed and lands on the California FAIR Plan, the auto policy often loses its multi-policy discount, because the FAIR Plan doesn’t write auto. The family pays more for the house and more for the cars.
• Umbrella complications. Many umbrella policies require the underlying home and auto policies to be with the same carrier or meet minimum limits. A forced change on one line can ripple into the others.
• Budget pressure leads to risky cuts. Families squeezed on both sides are tempted to drop to minimum auto limits or cut their dwelling limit, the two moves most likely to cause real financial harm after a serious loss.

Part 5: Where things are leveling off

There is good news, especially on the auto side:

• Smaller increases. Average approved increases for the largest California auto insurers fell from about 15.4% in 2024 to about 6% in 2025.
• Some rate cuts. State Farm, California’s largest auto insurer, filed for a 6.2% decrease targeted for February 2026, citing less costly physical damage claims. GEICO held rates steady for 2026.
• Fewer crashes. California Highway Patrol data show collisions fell about 9% from 2024 to 2025.
• National prices turned. The U.S. consumer price index for car insurance peaked at +22.6% year over year in April 2024 and turned negative in May 2026, reaching -5.1% in August 2026.

A word of caution: repair costs are still rising about 5% a year nationally, so this is a correction, not a return to 2019 prices.

Home insurance is improving more slowly. FAIR Plan growth has slowed sharply, and more carriers have committed to writing in California under the state’s Sustainable Insurance Strategy. But wildfire risk is a long-term problem, and the FAIR Plan’s 29.1% average increase took effect October 15, 2026. See The 2026 FAIR Plan Rate Increase.

Additional insight: why auto recovers faster than home

• Shorter claims cycle. Most auto claims settle within months, so insurers see cost trends quickly and can adjust. Wildfire losses are rare, enormous and hard to predict.
• No auto catastrophe model fight. Auto rates rely on recent claims experience. Home rates depend on forward-looking wildfire models and reinsurance costs, which California only recently allowed in rate filings.
• Competition returns faster in auto. When auto becomes profitable again, carriers compete for drivers quickly. Home carriers move more cautiously in wildfire country.

What you can do now

• Shop both lines together. Auto pricing is softening, and carriers that are writing homes again often reward a bundle. An independent broker can compare home, auto and umbrella across carriers at once.
• Re-shop your auto even if your home is stuck. If your home is on the FAIR Plan, your auto doesn’t have to stay overpriced. Some carriers will write auto alone at a competitive rate.
• Don’t drop to minimum limits. With about 1 in 5 California drivers uninsured, uninsured and underinsured motorist coverage matters, and the new minimums are still low for a serious accident.
• Use your deductibles and discounts. Higher deductibles, telematics or safe-driver programs, and good-student discounts can help.
• Protect your home’s insurability. Mitigation can help get your home back to an admitted carrier, which can restore the bundle. See wildfire mitigation discounts.
• Review your umbrella. Make sure a change on one policy doesn’t leave a gap in your liability protection.

Learn more about our California auto insurance options.

Sources

• Beinsure: California auto insurance rates jump over 30% since 2023 (S&P Capital IQ data)
• AM Best via ProgramBusiness: California grants auto rate hikes up to 31% (Jan. 2024)
• Repairer Driven News: State Farm 17.7% California auto increase
• Insurance Journal: State Farm files 6.2% California auto rate reduction
• Insurify: California car insurance costs fell in 2025
• Actuary.info: CPI motor vehicle insurance, August 2026
• Insurance Research Council: auto injury claim costs study (2026)
• California Department of Insurance: Palisades and Eaton fire claims data
• Stanford Report: California home insurance crisis (June 2026)

Start with your home

Getting your home back to an admitted carrier is often the key to restoring your bundle discount. A walk-through shows where your home stands with carriers and what to fix first.

Let’s look at your home and auto together

Paying more for both your home and your cars? We’ll re-shop them together. Book a 30-minute review with me or request a free quote. Current clients with questions about an existing policy or renewal can reach our service team at team@gold.insure.

Phil Irwin, President, Gold Insurance Solutions. CA License #6000540. General information as of October 2026, not legal advice. Coverage and pricing vary by carrier and home.